Fund Profile

Disclaimer

Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by BlackRock Frontiers. The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.

Overview
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Overview

BlackRock Frontiers (BRFI) offers access to the fast-growing, least developed markets in the world to which most investors have little or no exposure. BRFI aims to identify those companies which can benefit from faster GDP growth than developed markets and deliver long-term capital returns. Thanks to the nature of the market and healthy earnings growth in the portfolio companies, the trust is yielding a healthy 4.5%, despite the focus on capital growth. We consider the yield and dividend cover further in the Dividend section.

Managers Sam Vecht and Emily Fletcher use a mixture of both top-down macroeconomic analysis and bottom-up fundamental stock research to build their portfolio, and they estimate that over the long term around 50% of the alpha they have generated has come from each. The process is highly flexible, with the managers able to short stocks and use cheaper derivative contracts rather than buying the cash equities themselves (useful in markets which have lower liquidity than the more developed ones).

In themselves, the markets BRFI invests in tend to display relatively low correlation to developed and emerging market indices. Given the diversification that the managers are able to achieve, the trust has tended to display relatively low volatility in the past, which may be surprising given that less developed markets are regarded as riskier.

The trust has tended to trade on a premium in recent years, but is currently trading at par.

Kepler View

BRFI is the leading product for investing in the least developed markets, and we believe it offers valuable diversification for most investors (who are unlikely to have much, if any, exposure to the countries in which it invests). In our view, the long-term track record justifies the premium rating and the relatively high charges. This is not just in terms of the long-term total returns, but also in terms of the low volatility that Sam and Emily have been able to provide.

BlackRock’s investment process has been well designed, we believe, with a powerful blend of quantitative and qualitative inputs which help to deal with the complex picture created by a market made up of different economies marching to the beats of their own drums. We would also note the low volatility and low correlation to emerging and developed market indices the trust has displayed in the past.

Sam and Emily tell us that the valuations in their universe remain highly attractive, and they have increased the gearing on the trust this year, reflecting their bullishness. Another key attraction of the trust is the considerable yield. Even though this is a by-product of a capital growth-focused process, it is considerable compared to most income-focused equity trusts, and we believe it is another indication of the attractive valuations in this part of the market.

bull bear
BlackRock has extensive resources deployed to these inefficient markets
Frontier markets may suffer during the next cyclical slowdown, which they did in 2008
The managers have a strong track record of alpha generation
The OCF is not cheap, although the trust is the leader in its field
The yield is comparable to an equity income fund, yet offers the prospect of capital growth
Managers can go long and short stocks, which means gearing can be high at times
Continue to Portfolio

Fund History

19 Jul 2022 Fund Analysis
As major economies stumble, the world’s smallest markets may offer overlooked opportunities…
29 Apr 2022 Stock picking in the forgotten 40
The world’s smallest markets are widely neglected by investors. Emily Fletcher, Co-Manager of the BlackRock Frontiers Investment Trust plc, asks whether a change of market environment might bring about a new era for these unloved gems...
22 Dec 2021 No humbug
Our analysts look back at a year of predictions, theories and ideas, and highlight those they think could matter most…
07 Dec 2021 Results analysis: BlackRock Frontiers
BRFI has delivered outstanding returns in the last financial year, combining strong capital returns and an attractive fully covered dividend…
10 Nov 2021 Fantastic growth funds (and where to find them)
We found them in India, Japan, frontier markets, healthcare and the global sector – and here they are…
10 Nov 2021 Fund Analysis
Opportunities in smaller emerging and frontier countries bring BRFI to the fore after China woes…
10 Nov 2021 Slides and Audio: BlackRock Frontiers
Download the presentation and listen to the audio from our 'Fantastic growth funds (and where to find them)' conference on 4 November...
01 Sep 2021 Winter is coming
Summer was a welcome opportunity for exhausted investors to turn their backs on the legion threats they face, but they haven't gone away and the days grow short - we examine four in detail...
25 Aug 2021 Is the UK’s debt a ticking time bomb?
Our analyst argues Rishi is right to worry about government debt and borrowing…
16 Jun 2021 Fund Analysis
BRFI still looks cheap despite good gains in the recovery…
16 Feb 2021 The Last Frontier: finding growth in smaller emerging markets
Smaller emerging markets have been left behind as investors have focused on a handful of high growth areas. As the crisis fades, investors are already starting to recognise that these areas may provide high growth at compelling valuations.
20 Jan 2021 Kepler's top-rated investment trusts for 2021
We update our annual quantitative ratings for investment trusts…
18 Dec 2020 Results analysis: BlackRock Frontiers
BlackRock Frontiers has seen a dramatic improvement in performance since its year end, and the managers are excited about the outlook…
09 Dec 2020 A bumper harvest?
Agricultural and industrial commodities have rallied strongly, but what are the implications for emerging market allocations...?
02 Dec 2020 Fund Analysis
BRFI’s portfolio is trading on a record low valuation, putting it in a potentially strong position for a COVID bounce…
11 Nov 2020 Now that's what I call a discount!
Presentations and audio from our conference focussed on discount opportunities in the investment trust sector…
11 Nov 2020 Slides and Audio: BlackRock Frontiers
View the presentation and listen to the audio from our 'Discounts in Focus' event on 05 November...
22 Oct 2020 Spotlight on discounts
As our event focussed on discounts approaches, we update our portfolio of discount opportunities and review discounts across the wider IT universe…
07 Oct 2020 Emerging markets: beyond China
Investors’ focus has been directed towards China as its weight in global indices grows, however, this may see them miss out on the growth, income, and diversification opportunities elsewhere...
21 Aug 2020 Fund Analysis
BRFI’s portfolio is trading on a record low valuation…
18 Jun 2020 Gimme shelter
As income investors brace for impact we ask which regions and trusts are less likely to cut their dividends in 2020…
09 Jun 2020 Fortune favours the brave
Better yields and discounts are on offer in the emerging markets…
16 Jan 2020 Drifting apart: how emerging markets have become less correlated
We examine how correlations between different emerging markets have evolved, and whether single country strategies could diversify returns going forward....
30 Dec 2019 Fund Analysis
BRFI offers a strikingly high yield from undervalued regions with strong growth potential…
21 Aug 2019 Exploring the next frontier
The world’s developing markets may look and feel like large emerging markets, but they bring something new for investors. The team at BlackRock explain why…
03 Jul 2019 Push-me pull-you
Two contrasting influences are dominating the outlook for Asian markets - we analyse them and how Asia trusts are positioning their portfolios in response...
13 Jun 2019 Real growth in a world of fake news
Presentations and audio from our event at the London Stock Exchange, where six fund managers set out their stall for an exciting future...
10 Jun 2019 Fund Analysis
Sam Vecht's flagship emerging markets fund has kept pace with its new, more appropriate, benchmark so far in 2019 after a tricky start last year...
14 Nov 2018 Fund Analysis
BlackRock Frontiers is the leading fund for investors seeking exposure to the high development potential in frontier markets...
14 May 2018 Fund Analysis
Long-term capital growth from investment in companies operating in frontier markets...
19 Dec 2017 Fund Analysis
A high-quality trust managed by an experienced and well-resourced team that offers exposure to lowly correlated frontier markets
30 Nov 2017 Race ready
Our analysis suggests conditions are right for emerging markets fund managers who can add real alpha to generate strong returns...
29 Jun 2017 Fund Analysis
21 May 2017 Brave new world
We ask the top managers in each sector, region and asset class where they see the opportunities in the months ahead...
12 Oct 2016 Fishing for discounts
Despite a resurgence among emerging market equities, discounts continue to yawn among trusts in the sector – we highlight three that stand out...
11 Oct 2016 Fund Analysis
View all

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